A noncompete agreement with your employer can limit your opportunities if you want to work elsewhere. The Trump administration reversed a Biden administration position giving workers a stronger legal basis to challenge enforcement of these agreements. This change may not affect your rights under New Jersey law, which you should fully understand if you’re asked to sign such an agreement or are already bound by one.

The Kingston Law Group helps employees protect and enforce their rights under state and federal laws. If you have any questions or concerns about an issue with your employer, call us at 609-683-7400 so we can discuss the situation and how we may be able to help.

What Is a Noncompete Agreement?

A noncompete agreement is a contract between your employer and you that restricts your ability to:

• Work (usually for a competitor) or start a competing business
• For a given time period
• Usually also covering a geographic area
• After leaving the company
• Regardless of your reasons for departure

Employers should use these agreements to protect their legitimate interests, such as trade secrets, confidential information, and customer relationships. Your employer might prevent you from working for a rival company or starting your own. The employer could claim it would be unfair if you leveraged the knowledge you gained and the contacts you developed during your time with the company to their disadvantage.

New Jersey courts recognize the anti-competitive nature of non-competes and only will uphold/enforce them if their terms are reasonable.

Recent Federal Developments for Noncompete Agreements

The Trump administration recently dropped its defense of a Biden-era Federal Trade Commission (FTC) rule that would’ve banned most noncompete

agreements. In 2024, the FTC published a new non-compete rule that would’ve prohibited new non-compete agreements and made most existing non-competes unenforceable, according to the Cornell Journal of Law and Public Policy.

The FTC’s majority at the time decided that the federal law empowering the Agency to prevent unfair methods of competition, the Federal Trade Commission Act (FTCA), covered noncompete agreements. They argued that these contracts illegally restricted competition for job candidates, reducing their wages. The rule faced legal challenges, the agency lost in federal trial courts, and the FTC appealed those decisions.

After Donald Trump won his second election, he appointed a new majority to the Board that controls the agency. They reversed the FTC’s support eviscerating most non-competes, and the Department of Justice withdrew its appeal of lower court rulings in employers’ favor, reports Reuters.

Are Noncompete Agreements Enforceable in New Jersey?

Whether or not there’s a federal law supporting your claim that a noncompete agreement can’t be enforced against you, New Jersey law might decide the issue. New Jersey courts use state law to interpret whether they are valid, and if so, how they would apply in your situation. They use a three-part test to determine enforceability:

• The employer must seek to protect interests like trade secrets, confidential information, or customer relationships
• The agreement cannot impose an unreasonable hardship on your ability to earn a living. A court would consider factors such as why you left the job and whether you can find comparable work in your field with the restrictions in place
• The agreement must not harm the broader public interest

Generally, the enforceability of a New Jersey noncompete agreement depends on whether its terms are interpreted as reasonable. That would be judged on the following basis:

• Courts typically uphold agreements with a duration of six months to two years. The longer the agreement applies, the greater the chance it’ll be seen as excessive and unenforceable
• The restricted geographic area should be limited. The employer may be a local business with limited reach or operate worldwide. How this would be considered would be up to the court
• The agreement must be narrowly tailored. Restricting you from working for direct competitors in your specific role may be reasonable, while preventing you from working anywhere in your industry likely is not

The legality of a noncompete agreement depends on its terms. Unless it contains clearly extreme prohibitions, the agreement’s language, as applied to your situation, would need to be considered.

The key question will be: if federal law opposes limitations on non-competes, do the feds “occupy the field” and preclude State and local reforms of such agreements?  If the feds are deemed to “occupy the field”, then countervailing State or local policies will not prevail.  If they aren’t, then State law will become highly relevant to the outcomes.

What Should I Do If I’m Asked to Sign a Noncompete Agreement or Have Already Done So?

If you’re presented with a noncompete agreement:

• Read it carefully. Understand exactly what activities are restricted, for how long, and in what geographic area
• Consider the impact. How would these restrictions affect your career options if you left the company?
• The employer may be willing to change the proposed terms in their draft agreement. You may be able to limit the duration, geographic scope, or restricted activities through negotiations

Contact us before signing any contract with your employer or potential employer, especially one containing noncompete language. What seems reasonable to you may have serious long-term consequences for your career. It may be much easier and cheaper to negotiate changes in the agreement, or to refuse to sign it, than to agree to it and then challenge the contract.

If you’re currently subject to a noncompete and considering leaving your job, contact our office so we can review it. What you signed may or may not be legally binding. Your employer may also be open to negotiating the terms of your departure, preventing a legal battle. They may have given you a form contract and may not be overly concerned about the language that could hold you back.

Are You Concerned About Your Ability to Find Another Job?

Do you have questions or concerns about how a current or proposed noncompete agreement may prevent you from working elsewhere? If so, we will listen to your facts, explain the law, and suggest right and reasonable approaches for relief.

Kingston Law Group provides compassionate counsel and tough advocacy for employees. We are ready to help you, your loved ones, and your friends. Call us at +1-609-683-7400 or contact us online to schedule a near-term initial consultation at a reduced hourly rate. Call or write us today. You’ll be glad you did.